Life ins ch 9-
Insures all her options that can make joint line particularly attractive which of the following options is not offered
A provision for the exchange under section 1035 of the joint life policy for long-term care insurance policy
Which of the following could never be treated as a modified endowment contract
A single premium policy that was entered on June 1, 1988
A single premium life insurance in issued before June 21, 1988 is grandfather that is not the MEC modified endowment contract tax rules however it can lose this tax status if there is
An exchange on the policy for another policy
All of the following items should be considered in relation to enjoying life insurance policy except
An own occupation definition of disability
Important disadvantages of joint life include all the following except
And business markets joint life may eliminate the need for coverage when the need is to ensure the first death among several lives
A policy that originally is not a modified endowment contract will be subject to retesting if there is a material change in the contract which of the following would likely be a material change
And exchange of one policy for another policy and a 1035 exchange
For which of the following is use of a single premium whole life insurance
As a good short-term tax-deferred investment
Which of the following is a disadvantage of assumption whole life policy
CAWL policies guarantee maximum mortality and expense rates
If a limited whole life insurance policy is determined to be a MEC modified endowment contract
Distributions including policy loans will likely be includable in income
Which of the following items are not treated as an income first when distributed from a modified endowment contract
Dividends retained by the insurer to premiums or other consideration for the contract
A policy that automatically increases the death benefit without evidence of insurability will typically violate the MEC rules
False
An insurance contract entered into before 1988 can never be considered a modified endowment contract
False
Because of the way that it is taxed a modified endowment contract is not considered a life insurance policy for tax purposes
False
Group life provides an after tax benefit for employees and I deduction for employers
False
In a M AC contract insuring a single insured there is a no look back requirement
False
Most universal life policies are issued with front and load charges rather than back and load charges
False
Once the policy is classified as a modified endowment contract with certain directions it could be later treated as not a modified endowment contract
False
One of the advantages of group term insurance is that the premiums remain level on your employee basis regardless of the ages of the employees
False
Term insurance is always least expensive or form of insurance regardless of the duration of needed coverage
False
Under ERISA requirement covered by a group term life contract must name his spouse as beneficiary if he is married
False
Variable life or variable universal life insurance is well-suited to individual desiring a minimum basic level of coverage
False
Universal life insurance is
Flexible premium adjustable death benefit current assumption policy
Which of the following statements about the tax aspects of ownership of variable life insurance is false
Gains received our taxable at capital gains rates
If a term policy is convertible it means
Gives the policyholder a contract right to change policy or some other type of life insurance policy without evidence of insurability
Level premium whole life insurance policies allow policy owners to borrow amount under the policy typically loan provisions include which of the following requirements
If the policy is terminated the cash value is reduced by an outstanding policy loans and unpaid interest
Advantages of ordinary level premium whole life include all the following except
Interest policy loans is generally nondeductible
A survivorship life plan that involves a greater portion of term insurance than permanent insurance
Is sensitive to changes in yields or interest-rate's
Which one of the following is not an advantage of group term life insurance
It is can be used as a standard investment option under the employer's 401(k) plan
Group life insurance is a welfare benefit plan as a
It is subject to ERISA
Advantages of term life insurance include all the following except
It is the most cost-effective when the duration of the needed protection is over 15 years
Which of the following accurately describes a disadvantage of survivorship life insurance
It provides no benefits at the first death unless a special rider is added
Which of the following statements is true regarding current assumption the whole life insurance
Policy owners bear more risk of adverse trends and morality or expenses then if they owned traditional whole life policies
If the investment performance of a variable universal life policy is poor
Policy owners may be required to pay additional premiums
Disadvantages of term insurance include all the following except
Proceeds are not part of a probated estate unless the estate is a named beneficiary
Which of the following types of life insurance allows the greatest amount of death benefit to be purchased for a set amount of premium
Term insurance
Advantages of single premium life include all the following except
The amount of protection is low relative to the premium paid
Which item is not a key factor to be weighed and choosing the best variable life are variable universal life policy
The amount of the cash value guarantees
Insurance companies generally recover sales commissions and initial policy expenses from variable universal life policy is with in
The first 10 years
Surrendering a universal life policy results in considerable loss if the policy is surrendering during
The first 5 to 10 years
I limited whole life insurance policy with a short premium paying Runs the risk of becoming a MEC modified endowment contract if
The insured pays the full annual premium and dividends are applied as additional premiums
Which of the following statements is true regarding current assumption whole life insurance
The insured promises to credit at least a minimum guaranteed rate of interest
Which of the following statements regarding universal life insurance is not true
The policy is not susceptible to and advertently becoming a modified and down that contract
Hey survivorship rider-permits
The purchase of increase coverage on the insured if the life designated in the rider dies before the insured
Which of the following is true regarding the interest credited to universal life policy's
The right used may be linked to a well-known index of yields if it exceeds a minimum rate guaranteed in the policy
A modified endowment contract is a life insurance policy that has failed
The seven pay test
Which of the following is a characteristic of a level premium nonparticipating whole life insurance policy
There is a schedule of guaranteed cash values
a key feature of variable life insurance is
There is no guaranteed minimum cash value
An important use of joint life insurance has been
To find Byselle agreements in closely held businesses
In which of the following situations would A level premium whole life insurance policy be appropriate
To provide funds for the continuation of a business through a buy sale agreement
Current assumption whole life insurance is generally a hybrid of
Traditional whole life and universal life insurance
A 10% penalty applies to certain distributions from life insurance policy's that are treated as modified and down the contracts
True
A term life insurance policy makes no promise to pay anything at the insured lives beyond this is specified term
True
All universal life policies have a guaranteed minimum interest rate generally ranging from 4 to 6%
True
As long as a cash value are sufficient to cover policy charges a universal life policy owner may skip premium payments
True
Most group insurance is insured as yearly renewable term insurance
True
Most insurance companies do not offer renewable policies to new applicants after a certain age which is usually between 60 and 70
True
One disadvantage of universal life is that policy owners bear more risk of adverse trans and morality or expenses that if they own traditional whole life policies
True
Term life insurance is ideal for temporary need such as paying all funeral estate and inheritance taxes
True
Variable life and variable universal life are especially suited for many business insurance situations where flexibility and growth of cash value are attractive features
True
Verbal life is a whole life policy where the policy owners
True
Which of the following statements regarding universal life insurance is true
Universal life allows policy owners to participate in favorable investment morality and expanse experience of the company insurance policies
Which of the following statements about variable universal and variable life insurance death benefit is not true
Variable life and variable universal life bear no morality or expense risk
A significant advantage of a split dollar plan using survivorship life instead of a single life policy is that
Very low table 38 rates are used to measure the pure insurance cost of survivorship life while both is insureds are alive instead of the higher PS 58 rates
And employee does not have to report any income with respect to what Amount group term insurance coverage assuming the plan is not discriminatory
$50,000
Approximately what percentage of all life insurance in force in the United States is on a group basis
40%
Which of the following problems could be caused by the flexibility offered by a universal life insurance policy
A death benefit reduction may cause the policy to be classified as a modified endowment contract
A single premium current assumption life policy guarantees all the following except
A fixed level of dividends will be paid through out the time of the policy
And increasing premium level death benefit term policy to age 65 is
A one year term policy renewable to age 65
